From a lack of transparent market data to 16 jurisdictions making housing decisions simultaneously, experts reveal the structural failures driving Malaysia's persistent property oversupply and whether the government's latest interventions are enough to fix it.

By Khalil Adis

Kuala Lumpur is one of Southeast Asia's most dynamic cities. 

It is also right now sitting in the middle of one of the region's most persistent property oversupply problems.

Malaysia has a problem and it is hiding in plain sight.

According to data from the National Property Information Centre (NAPIC), as of the first half of 2025, Selangor leads the oversupply table with 17,914 unsold units, followed by Johor at 12,426, Kuala Lumpur at 12,174, Perak at 11,582 and Penang at 11,352.

Nationally, Malaysia has 65,448 unsold residential units in total covering units that are unsold and completed, unsold and under construction and unsold but not yet constructed. 

The majority are still under construction, which means the pipeline is still building even as the existing stock struggles to move.

To put that in perspective, Singapore has 15,810 unsold private residential units including Executive Condominiums (ECs) in its pipeline as of the second half of 2026, according to Urban Redevelopment Authority (URA) data. 

Malaysia's unsold stock is more than four times that figure in a market with significantly lower purchasing power.

So what is driving this? 

The data problem nobody is talking about loudly enough

Market watchers and analysts say the lack of data and mismatch has led to this persistent issue.

As a result, nobody has a complete picture of what the market actually looks like.

"The market data relating to supply and demand has been fairly lacking in a transparent manner," said Prem Kumar, group managing director of Firdaus & Associates. "The data is scattered in different aspects, different forms and different avenues. There isn't a kind of centrally collated data whereby a consultant like my firm, if appointed by a developer, can readily access the data and from there do the analysis of the market in terms of the type of product, affordability, the range, the pricing and so on."

In other words, developers are building without a complete picture of what the market needs. 

Without the full picture, the mismatch between supply and demand compounds year after year.

Billy Tan, principal of Landlords Property & Facilities Management Sdn Bhd, sees the consequence of that mismatch on the ground daily. 

"There is a real oversupply in the property market, especially residential property. The supply from developers keeps on coming, whether or not it meets the buyers' requirements. Besides the oversupply, there is a mismatch situation."

The mismatch has another problematic layer that most analysts do not see entirely. 

Hajjah Adriana Abu, Advocate and Solicitor and the legal advisor the National House Buyers Association (HBA), points to the cross-subsidy problem built into Malaysia's development framework.

"Before a Development Order (Do) is given, developers must allocate land for public utilities, public infrastructure and Bumiputera plot allocation. When the mampu milik (affordable) category shrinks the available land for market segment housing, developers need to make money. What happens is they hike up the housing price because they have to cross-subsidise whatever is required to make the affordable units viable.”

HBA is a voluntary, non-political, non-governmental, non-profit organisation that is manned by volunteers.

What results is a market where affordable housing targets are met on paper while market-rate housing becomes increasingly unaffordable in practice.

The units sitting empty are the affordable ones

Most alarmingly,  the majority of Malaysia's unsold completed units are not luxury condominiums. 

They are affordable homes priced below RM300,000.

NAPIC data shows that this segment makes up 36.1 percent or 9,710 units of total unsold completed stock. 

Houses priced between RM300,001 and RM500,000 account for 26.5 percent (7,125 units), while the RM500,001 to RM1 million range makes up 25.8 percent (6,951 units). 

Properties above RM1 million account for the remaining 11.6 percent (3,125 units).

"Oversupply is concentrated within the affordable segment. Those houses with the mampu milik (affordable) tag," said Hajjah Abu, who spoke at a panel session titled 'First-time Homebuyers in Malaysia: Are Current Housing Schemes Aligning with Market Reality' at the Malaysia Residential Development Conference 2026. "There are still a number of Malaysians who are unable to buy a home in Malaysia.”

To put simply, many affordable units are sitting empty with the people who need them, unable to  do so.

Meanwhile, the people who can afford them are often ineligible. 

Malaysia’s housing system has produced two problem simultaneously - oversupply and unaffordability. 

This points to a remarkable policy failure.

Sixteen jurisdictions. Zero unified data.

The deeper structural problem, however,  is one of coordination or the lack of it.

Malaysia has 16 jurisdictions with 13 states and three federal territories, each making housing decisions simultaneously without a unified framework or shared data system.

At the federal level, Residensi Madani and PR1MA each operate with their own eligibility criteria, income ceilings and application processes.

There is also the Rumah Wilayah which serves the federal territories of Kuala Lumpur, Putrajaya and Labuan under a separate framework.

At the state level, Selangor has Rumah Selangorku, Johor has Rumah Mampu Milik Johor (RMMJ), Perak has Rumah Mampu Milik (RMM) and other states operate their own equivalent programmes.

To add to the confusion, each affordable housing programme comes with their own rules, stock and definition of what affordable actually means.

Compare that to Singapore which has one housing authority, the Housing & Development Board (HDB), with one eligibility framework and one application process. 

In a country where 80 percent of Singaporeans live in HDB flats, the system works because it is unified, centrally managed and consistently enforced.

Meanwhile, Malaysia’s approach is fundamentally different and fundamentally more complicated. 

Hajjah Abu flagged another specific issue with PR1MA, the country's main federal affordable housing agency. 

"PR1MA's intake for affordable housing may not be that attractive in rural areas, probably because there is a design mismatch. There are also other agencies at the federal and state levels addressing affordable housing."

The overlap without coordination has created market confusion and very likely made the oversupply situation worse. 

Kumar is clear about what needs to change. 

"It will require effort from the various government agencies. It has to be coordinated by a certain ministry within the government. The collation and compilation and high-level segmentation of the data will be important. It has got to come from the government primarily. That's where a lot of the data is stored across various agencies. There has to be a collective effort spearheaded by a certain arm of government to also ensure the reliability and integrity of that data."

The gig economy's invisible homebuyers

There is also another group caught in this gap that the conventional housing data barely registers - Malaysia's 1.2 million gig workers.

Comprising freelancers, delivery riders, independent contractors and self-employed Malaysians, they have been largely invisible to the formal housing finance system. 

Without employer letters, conventional CPF-equivalent salary documentation and the paper trail that banks were designed to read, most of them could not qualify for a home loan regardless of their actual income.

However, that changed when Parliament passed the Gig Workers Bill in 2025.

Under the Bill, Syarikat Jaminan Kredit Perumahan (SJKP), Malaysia's housing credit guarantee company, has had its guarantee ceiling doubled from RM10 billion to RM20 billion. 

For the uninitiated, SJKP acts as a guarantor that steps in when a buyer cannot fully meet the bank's requirements on their own. 

It bridges the gap between what the bank needs to see and what the buyer can actually provide.

So what does RM20 billion mean on the ground? 

It means 80,000 first-time buyers, many of them gig workers and self-employed Malaysians, can now access mortgage guarantees that they could not access before. 

Combined with stamp duty exemptions for first-time buyers purchasing homes below RM500,000 under Budget 2024, this new demand could potentially absorb some of the 9,710 unsold completed units priced below RM300,000.

For developers, 80,000 is a buyer pool that simply did not exist two years ago and is now being activated by government intervention. 

The question, as always, is whether what is being built is priced and located where those buyers actually need it to be.

Tan puts the affordability picture plainly. 

"Affordability in Malaysia is still there, based on annual income of RM7,000 to RM8,000. It takes about 4.5 to five times to own a property. There is still a lot of oversupply. That is the crucial thing that needs to be addressed."

The people who fall through every gap

Perhaps the most revealing observation in this entire conversation came from Hajjah Abu.

As someone who has spent years working on affordable housing issues and who has experienced the system as a buyer herself, she knows the challenges buyers faced.

"Some of these homes are not affordable to own by the target group. The ones who can afford to buy are not included in the category. They are pushed out because their salary is in the median range."

What she is describing is a specific group that the system has no category for.

These are the sandwiched class - people who earn too much to qualify for affordable housing but too little to buy at market rate. 

In Klang Valley, for example, where average market-rate affordable homes are priced between RM600,000 and RM700,000, the gap between the income ceiling for subsidised housing and the entry point for market-rate housing is where a significant number of Malaysians are stuck.

"For this segment, they can afford to buy affordable homes but they cannot do so because they have exceeded the income ceiling. If they want to buy market-rate homes, they are unable to do so. So where can they buy?” 

This is a question that Malaysia's housing system, across all 16 of its jurisdictions, has not yet adequately answered.

Then there is the income volatility problem for gig workers specifically. 

"The target group for the affordable segment also struggles to service houses priced at RM300,000 and below because some are not salary earners but gig workers or even petty traders with kais pagi makan pagi (those who earn day-to-day) income,” said Hajjah Abu.

Finally, there is the location mismatch. 

"The affordable segment houses are also a bit mismatched with location. What is considered cheap in Petaling Jaya and Kuala Lumpur may not necessarily be considered cheap in Ipoh and so on. The price range cannot be the same throughout," said Hajjah Abu.

What needs to happen

Malaysia's property market needs structural reform across several dimensions simultaneously.

Firstly, there is a need for a transparent, centrally collated government data that gives developers, consultants and policymakers a complete and reliable picture of supply and demand across every state and price segment. 

Secondly, the government needs to appoint a ministry to coordinate decision-making between federal and state housing agencies so that schemes complement rather than duplicate each other.

Thirdly, a housing finance system that genuinely serves the gig economy rather than treating irregular income as disqualifying. 

Thankfully, this has been largely addressed by the Gig Workers Bill 2025.

Fourthly, the government needs to come up with new pricing frameworks calibrated to actual income levels across different states rather than applying uniform national thresholds to markets with vastly different cost structures. 

Last but not least, location planning that builds affordable housing where people actually need to live rather than where land is cheapest.

None of these are new observations. 

They have been discussed at industry conferences, in parliamentary committees and in property research reports for years. 

For them to work, there is a need for a strong political will to coordinate the solution across 16 jurisdictions simultaneously.